African Barrick Falls Most in 14 Months in London on Sale

March 11 (Bloomberg) -- African Barrick Gold Plc slumped
the most in 14 months in London trading after its parent, the
world’s biggest producer of the metal, sold a 10 percent stake.

The unit of Barrick Gold Corp. fell as much as 17 percent,
the largest drop since Jan. 8, 2013. The parent sold 41 million
shares to institutions for $188 million, cutting its stake to 64
percent less than four years after an initial public offering.

“This sale confirms that the parent is an ongoing seller
and has been a potential seller since the 2010 IPO left it with
more shares than it had hoped,” Citigroup Inc. said. “Having a
parent keen to dispose of stock does not help with the image
that Barrick has been an uncomfortable investor in Africa.”

Barrick Gold, based in Toronto, sold shares in its African
arm for 275 pence apiece, it said yesterday in a statement. UBS
AG, JPMorgan Chase & Co. and Royal Bank of Canada managed the
sale. The parent had already held talks with China National Gold
Group Corp. in 2012 over selling its majority stake, with
discussions ending in January of last year without agreement.

Barrick Chief Executive Officer Jamie Sokalsky is seeking
to boost profit and returns after gold’s biggest annual drop in
three decades last year. He cut output forecasts and spending,
and sold about $1 billion of assets in the past eight months.
The company also suspended construction of its delayed and over
budget Pascua-Lama project on the Argentina-Chile border.

Realize Liquidity

“This transaction allows us to realize some liquidity,”
Sokalsky said in the statement. It’s part of the “program to
optimize and lower the average cost of our portfolio.”

African Barrick has been dogged by setbacks since it first
listed, struggling to meet production targets. When listed, it
planned annual output of 1 million ounces by 2014. Instead, the
company has posted declines for three years and been surpassed
by rivals Randgold Resources Ltd. and Petropavlovsk Plc.

CEO Greg Hawkins quit in August and Brad Gordon was hired
as a replacement to try to reverse the company’s fortunes.
African Barrick, which operates mines in Tanzania, in January
reported its first annual increase in production since listing.

“This is a positive step by Barrick which significantly
increases our free float,” Gordon said in a separate statement
today. “The placing is a reflection of the increased interest
in the business as a result of the progress we are making.”

The company’s shares are still up 13 percent in the past 12
months, while the 30-member Philadelphia Stock Exchange Gold and
Silver Index has declined 25 percent.